Aeroflot received 112 billion rubles. from an insurance settlement for 76 Western aircraft
[ad_1]
Aeroflot (MOEX: AFLT) received approximately 112 billion rubles. positive financial effect from the settlement of 76 Western aircraft in 2023, follows from the group’s reporting. The effect of the settlement allowed the company to reduce its loss for the year by 3.6 times, to 14 billion rubles, despite the reduction in industry government subsidies. Taking into account adjustments for exchange rate differences and one-time effects, the company announced last year a net profit of 10.4 billion rubles. for the first time since 2019. However, experts note that the effect of restoring passenger traffic, especially on international flights, may already be exhausted.
Aeroflot received a positive effect of approximately 112 billion rubles. due to an insurance settlement on 76 Western aircraft in 2023. This calculation was made by Elena Sakhnova, an analyst at the My Investments channel, based on Aeroflot’s IFRS report. The company itself disclosed that the overall positive effect amounted to 135 billion rubles, since by this amount the total volume of written-off lease obligations, reserves for repairs before the return of ships and accounts payable exceeded the estimated value of assets. However, the company overestimated reserves for deposits made for new vessels by RUB 26 billion. If the settlement value of the aircraft indicated in the report is 224 billion rubles. adjusted for accumulated depreciation (151 billion), then the real residual value of “settled” aircraft may be 73 billion rubles. at the exchange rate at the time of purchase, says Elena Sakhnova.
Since the end of 2022, Aeroflot has converted 94 aircraft that previously belonged to foreign owners into Russian ownership. This number includes 76 aircraft re-registered with money from the National Welfare Fund from an operating lease, ten Boeing 777 re-registered from a financial lease, as well as eight Airbus 330 purchased by the company at its own expense. There are currently 349 aircraft in the group’s fleet.
The insurance settlement had a positive impact on the group’s burden on leasing payments, since the company, thanks to receiving funds from the National Welfare Fund, will now pay leasing at a preferential rate of 1.5%. Taking this into account, the total volume of liabilities, taking into account interest, will be reduced by 12–13%, despite the extension of the terms of leasing agreements to 15 years. Previously, aircraft from Western lessors were placed under operating lease for an average of seven years at the then generally accepted rate of 6–7%. The positive effect of insurance regulation, according to Elena Sakhnova, “remains unconditional” due to the distribution of the debt body over a larger number of years and a reduction in the burden of monthly payments.
At the same time, Aeroflot’s total aircraft leasing obligations for 2023 increased by 29.5%, to RUB 642.9 billion. “We see that lease liabilities increased by 146 billion rubles: by 15 billion rubles. short-term and 131 billion rubles – long-term,” the expert adds. There are two reasons for this increase: the sale and leaseback of ten Boeing 777s in April 2023, as well as the revaluation of foreign currency leases.
The effect of the settlement helped Aeroflot reduce the group’s net loss for 2023 by 3.5 times, to RUB 14 billion. The company emphasized that the result was significantly affected by exchange rate revaluation, which “improved the results of 2022 and worsened the results of 2023.” Taking into account adjustments for the effect of the exchange rate, insurance settlement, as well as other non-cash effects, the group in 2023 for the first time since 2019 received a net profit of RUB 10.2 billion.
This was facilitated by an increase in revenue by 48%, to RUB 612.2 billion. At the same time, the group’s passenger traffic in 2023 increased by 16.3%, to 47.3 million people. Experts interviewed by Kommersant explain the growth in revenue by an increase in ticket prices, as well as an increase in the number of passengers carried on foreign flights by 79%, to 9.6 million people. The group’s revenue from flights abroad doubled to RUB 216 billion. The largest share was made up of flights to the countries of the Near and Middle East and Africa – 94.8 billion rubles. (more than doubled); flights to Asian countries brought the group 73.5 billion rubles, to CIS countries – 45.5 billion rubles. (increase by 1.5 times). Revenue from transportation within the Russian Federation over the year grew by more than a third, to almost 348 billion rubles. Aeroflot retains “hope for the continuation of positive trends,” but, according to Igor Smirnov from Expert RA, the demand for foreign destinations, taking into account the cost of tickets and the ruble exchange rate, has reached its limit. The growth in traffic volumes within the Russian Federation will depend on the success of the development of Aeroflot hubs in Siberia and the Far Eastern Federal District, he notes.
Operating expenses excluding wages and depreciation increased by 30%, to RUB 411.3 billion. Aircraft maintenance costs increased the most, by 82%, from RUB 12.8 billion to RUB 23.3 billion. The cost of servicing aircraft at airports and on the highway increased by 36.6% – up to 90 billion rubles. in a year.
To assess the efficiency of airlines, they traditionally use the EBITDAR indicator, which is calculated only on cash operating income and expenses without taking into account rental payments, says Alexander Gushchin from ACRA. Aeroflot’s EBITDAR in 2023 grew comparable to revenue, which is a good result given the end of anti-crisis subsidies. However, the expert points out that the ratio of lease and interest payments to EBITDAR increased from 1.2x in 2022 to 2.1x in 2023.
[ad_2]
Source link